Costs to consider when raising a family


Family planning is not a very romantic notion to explore, however with the costs of raising children soaring it pays to be educated about how much it may cost to start and raise a family and what you can do beforehand to avoid any surprises.

Fertility, Pregnancy and Birth

Before you even consider trying to conceive, you should think about the type of hospital cover you want and/or need for your pregnancy.  If you want your own obstetrician and a private room post birth, then you will need private hospital cover with obstetrics.  Private health insurance doesn’t cover out-of-hospital expenses like obstetrician appointments, although those visits may be covered to some extent by Medicare.  If you are happy to go to your local public hospital and use the doctors or specialists on duty at the time then no additional insurance is needed although ambulance cover is recommended.  You need to think about this before you fall pregnant as most insurance companies will have waiting periods.  

Raising a child is one thing, but what about the cost of fertility, pregnancy and birth?  If you are fortunate enough to fall pregnant naturally then fertility costs are very low bar for the cost of a few multivitamins.  But for coupes who struggle to conceive, there are a number of options to explore with varying costs.  According to IVF Australia, the cost of IVF is approximately $9290 per cycle ($4501 with Medicare rebate) plus associated costs.  

“Raising kids is a walk in the park… Jurassic Park”

Parental Leave

Once you take time off to have your baby and care for it you have several options for income:

  • Mandatory 18 weeks parental pay which is currently $695 a week before tax.

  • 2 weeks Dad or Partner Pay

  • Additional Employer Parental Payment

  • Rely on savings

Currently, it is mandatory for all Australian workplaces to offer 12 months parental leave to those who will be the primary carer of a newborn or recently adopted child with 18 weeks paid leave.   Parental Leave Pay is a taxable payment which means it may affect your existing family assistance entitlements, child support arrangements and tax obligations.  Check eligibility rules here.

Once your 18 weeks payment is up, you will have to make a decision; return to work, or stay at home.  Interestingly, both require an income adjustment.  Be mindful that if you do not have access to paid parental leave from your employer, then a reduction in your lifestyle may also be necessary, as for a significant period of your parental leave, you may be relying on one income only.  Lattes, movies and dining out may all become a thing of the past… and not just because you are sleep deprived! Putting some savings strategies in place prior to your leave is a good idea if you wish to maintain your standard of living.

The Cost of Returning to Work

If you choose to work who will be looking after your child?  If you do not have family to help then childcare is unavoidable.   Daily fees vary but around $100/day is not uncommon.  This means you would be outlaying $700/week (before any rebates) just so you can return to work.  Alternative options such as family day-care and hiring a nanny are other options you may consider.  

Leading up to the Birth

Babies are expensive!  There is a whole gamut of equipment and tools you are told you need in order to cope with parenthood.  If money is no object then by all means go all out with the latest and greatest, however if you are on a shoestring budget it pays to stick to the basics and shop second-hand where possible.  After all, babies use equipment for such a small amount of time that most recycled items are still in excellent condition.  A decent pram, cot, baby carrier, high chair and car seat are all necessities but if you are smart you can hint to your loved ones that vouchers or a group present for your baby shower will be much appreciated!

Stuff and More Stuff

Unless you are Beyonce and Jay Z and can afford to lash out on a $1 million dollar Mercedes Minivan you will need to consider where you are going to put all this equipment.

This is where you need to factor in the size of your house and car.  Will the pram you just bought fit in your boot along with the groceries?  If you decide to have a second child will two car seats fit in the back?  Do you have a spare room for your baby to set up as a nursery and what if you have more children?  Is your house big enough? Will you want/need a backyard?  These are big decisions and big investments so it pays to do some pre-planning.

Other costs to consider before your baby arrives are pre-natal classes not covered by your hospital such as calmbirth, hypnobirth or yoga classes.

Baby Bliss - Nappies and Food

There is no way to escape these costs but there are options to save money.  Obviously breastfeeding is free but it is not easy and if for some reason you choose to bottle feed you will need to pay for formula which can cost up to $30/tin.  Nappies too are a necessity and babies can go through up to 10 nappies a day in their first 12 months. If you factor in wipes, the cost can be up to $2,000 in the first year. Cloth nappies are an alternative although there is an initial outlay.

“A perfect metaphor for parenting is trying to stand
up in a hammock without spilling your wine”


Education and How to Fund It

There are an abundance of other costs that come with raising children over their lifetime, however one of the most significant is education.  Depending on the style you choose it can be a hefty outlay.  If you choose public schooling for your child’s primary years the fees will be minimal.  However once they hit high school this all changes.  According to NATSEM, The Private vs. Government vs. Catholic school choice is a major decision for parents as after 6 years of high school, the total cost ends up being around $68,000, $25,000 and $4,000 respectively per child.

If parents or grandparents have a mortgage, often the most efficient way of funding education may be to set up an offset account with the education funds in it: these will reduce the mortgage interest providing a healthy after-tax return and funds can simply be drawn from the offset account when required. Talk to your financial adviser to find out what best suits your circumstances.

Did You Know?

A $1,000 upfront investment in a diversified portfolio earning 7% pa, plus a regular contribution of $100 a week, could give parents an education fund worth $100,000 by the time their child is ready for high school? 

Family Planning for a Later Date

Women are increasingly delaying marriage to seek further education or establish themselves in their careers. And as the costs of raising a child outlined above have shown it is no wonder more people are waiting until they have the necessary resources to start a family. According to AIHW report: Australia’s Mothers and Babies 2013 - the proportion of mums aged 35 and over is up: 22 per cent (from 19 per cent) from the previous decade.  In fact, in the past 20 years, the number of women having children in their mid-40s and beyond has tripled.  

Cryofreezing young, healthy, and unfertilized eggs has been marketed toward women in their 20s, 30s, and even 40s who want to have a career first and then have children in their 50s. While the technology appears to be an attractive strategy for that purpose, it is also a largely unregulated industry which many think gives women false hope.  It also costs between $7,000 to $10,000 per menstrual cycle to harvest a woman’s eggs.  Remember none of the costs of raising kids disappear if you do decide to have a child at 50 and you are then adding an additional expense to the equation.


While it’s common knowledge that children bring a huge amount of joy to their parents, they also come at a large financial cost.  Being informed is the key to making the right decision for you and your family, and having a sensible budget and savings plan in place is key to minimising unnecessary financial stress. 

Disclaimer: All strategies and information provided in this article are general advice only; this advice may not be suitable to you because it does not take into consideration any of your personal circumstances.